Will Verizon, Google Partner In YouTube TV Streaming As 5G Ramps Up?

Verizon Communications (VZ) has put off the launch of its own live-TV internet service, but the telecom could announce a video streaming partnership next week, with Google's YouTube TV looming as a possibility.

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Matt Ellis, Verizon chief financial officer, said at a JPMorgan conference in Boston on Wednesday that it's exploring other options rather than offering its own over-the-top, or OTT, video product.

JPMorgan, meanwhile, last week upgraded Verizon to buy on views that next-generation, "5G" wireless services will drive growth. JPMorgan analyst Philip Cusick also noted "Verizon has no plan to build its own full OTT linear video offer. Instead the company will announce on May 21 its plan to partner with an existing linear OTT player bundled with the fixed broadband product, as well as four Oath channels."

Verizon holds a meeting with sell-side analysts on May 21 to update its plans in wireless and digital media. The company plans to bundle video-streaming services with its 5G wireless services.

Verizon, which acquired AOL and Yahoo, has grouped the internet assets in a new unit, branded Oath. Verizon has a portfolio of rights to stream sporting events, including those in the National Football League and National Basketball Association, as well as entertainment assets and Yahoo Finance.

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Hulu Up For Grabs

If Verizon announces a video streaming partner, Google's YouTube TV looms as a possibility by a process of elimination.

Verizon competes with AT&T (T) and Dish Network (DISH), which have their DirecTV Now and Sling streaming services, respectively. Hulu's owners include Walt Disney (DIS), 21st Century Fox (FOXA) and cable TV firm Comcast (CMCSA), also a rival of Verizon.

AT&T could be part-owner of Hulu if its acquisition of Time Warner is approved. Hulu also could be up for grabs as Comcast and Walt Disney fight over acquiring Rupert Murdoch's Fox.

YouTube TV A Money Loser

Google-parent Alphabet (GOOGL) has not disclosed how many subscribers the $40-a-month YouTube Live service has signed up. Bernstein Research analyst Todd Juenger said in a note to clients earlier this week that YouTube TV is a money-loser, though it doesn't matter to a company the size of Google.

"There doesn't seem to be an obvious path to not losing money. The financial model doesn't scale," he said. Juenger says Google could have an interest in expanding sports content to set its service apart.

Verizon edged up 0.2% to close at 47.86 on the stock market today. A high-dividend paying stock, Verizon has been pressured by rising interest rates.

Alphabet inched down less than 0.1% to 1,084.09. Its stock has been pressured by rising investments in self-driving cars, cloud computing and other areas. Alphabet is up 1% for 2018.

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